Managing costs is undoubtedly a major motivator for outsourcing. Offshore models can offer dramatically reduced costs. The low direct costs of offshoring are obvious, but to get the whole picture you need to factor in the hidden costs and hidden benefits that are often overlooked.
Direct Costs
Over the last few years, executives have considered offshore outsourcing as an opportunity to save 50% off their internal fixed direct cost. The following chart gives an example of possible savings.
Economic Value of a Domain Expert
- Immediate total cost savings
- Immediately make cost structure variable
- Avoid future fixed costs during any upturn in business
Economic Value of a Domain Expert
Hidden Costs
Time and again, third party studies have determined the true total cost of non-core operations is often underestimated by executives. How much money is spent on initial and ongoing training and management of training, such as curriculum development, delivery and assessment? Facilities? Computer, software, network, help desk and other IT costs, staff and management? Other management costs associated with managing the operation internally? Some studies put these ‘forgotten costs’ as high as 50% of direct costs.
Hidden Benefits
As those same executives see growth in demand for their services building up, they are avoiding adding fixed costs with long lead times by benefiting from the flexibility that Integreon provides their operations with trained resources that can scale up and down with little to no notice.
For example, over a three year period a customer increased its capacities, reduced cost, and improved service levels.
Onsite and Offshore Resources
Onsite and Offshore Resources
- Greater total staff complement globally, enhancing level of service to professionals
- Investment in training
- Investment in continuous improvement programs such as Six Sigma
Focus on core business, benefit of innovation and industry best practices, etc.